Will reserve round kickstart Brazil's solar sector?

Thursday, September 25, 2014

Brazilian solar power developers are hopeful that October's reserve auction will provide the boost the sector has long craved. For the first time, solar plants have been given their own category at a Brazilian bid round for new generation projects.

But while the industry is upbeat, key challenges must be overcome for solar power to replicate the success of wind, according to Erick Castro, the CEO of consultancy Nótus Soluções Renováveis. 

BNamericas: For the first time in Brazil, solar plants will compete in their own category at next month's reserve auction. Will this provide the boost the sector needs to catch up with other renewable sources?

Castro: The success of the auction will depend on the ceiling price, which will only be known at the time of the auction, in addition to the volume of energy the government seeks to contract. The expectations from the industry are positive. Without doubt it's going to be a major boost to the sector. 

BNamericas: Do you think there will be more auctions of this type in the future?

Castro: The future of these auctions is more a political issue than technical. But we think that there will be a move towards more auctions specifically for solar plants. 

BNamericas: When will solar power be able to compete directly with other energy sources at Brazil's power auctions? 

Castro: Indirectly, solar power already competes when the government decides to contract a given percentage of an energy source instead of another. There's no way to accurately respond to the question because it depends on a number of issues like regulatory stability, guarantees of future auctions, fiscal incentives, etcetera.

The market has the capacity to react quickly. Given that this year is one of a changing political landscape, we believe that it won't happen before 2016.

BNamericas: Brazil's wind sector has experienced rapid growth in the past two years. Can the solar sector have the some success? If so, how?

Castro: Solar energy can have the same success that wind energy has had. But appropriate measures need to be adopted now. We need to either abolish import taxes on supply chain products or provide sufficient subsidies so that the industry can establish itself here.

The greatest incentive will be ensuring regular demand. And for that to happen we need a plan for successive auctions. Something like 500-1,000MW a year would be fantastic.

About Erick Castro

Erick Castro is an experienced developer of wind and solar power projects, having worked with several renewable energy generation companies before taking up his role as CEO of independent consulting firm Nótus Soluções Renováveis.

About the company

Based in Fortaleza, Nótus Soluções Renováveis is an independent consultancy and engineering company that specializes in the development, implementation and operation of renewable energy generation plants.